The increase in the price of items in the country has reached alarming heights, averaging 126.7 per cent between the Year 2020 and the present date according to the Manufacturers Association of Nigeria, MAN, who blamed it on current economic headwinds.

Local manufacturers have been forced to pass the increase in the price of inputs to the final consumers who have now been over-stretched.

The association also noted that worsening foreign exchange challenges in the country are fueling inflation which currently stands at 15.9 percent, spiking the cost of operations and eroding the confidence of investors.

Segun Ajayi-Kadir,  the Director-General of MAN disclosed that the real sector is affected by the 2020 COVID-19 pandemic, worsening insecurity, forex volatility, and Russia’s invasion of Ukraine, which have all contributed to an increase in the cost of production of manufacturers, and the increase in commodity prices for Nigerian consumers.

Ajayi-Kadir explained that the surge in the price of commodities which has averaged about 126.7 percent is injurious to local manufacturers as it will increase their inventories and lower capacity utilisation as demand thins out.

This, the MAN D-G said, threatens the ability of operators to remain in production especially when the purchasing power of Nigerians has thinned down

The majority of the Civil Servants are still on the minimum wage  (N18,000 and N30,000) while many have lost their jobs owing to the country’s prostate economic condition.

He analysed the average commodity price change of 126.7 per cent between 2020 and the present date, stating the percentage increase is arrived at from the drop in 5,340MW electricity in the Year 2020 to 2,000MW in 2022, representing 63 per cent change while Pizza that is bought at N2,800 in 2020 now averaged N3500 in 2022, indicating 25 per cent change.

The change in the price of Diesel averaged 294.7 per cent following the increase in its price from N190 in 2020 to N750 in 2022. while the price change of Petrol which rose from N145 in 2020 to N200 in 2022 represents a 37.93 per cent change.

The difference in the price of the Bag of flour which sold for N8,500 in 2020 but moved to N22,500 in 2022 is181 per cent,  Oil Price that was $43 in 2020 jumped to $108 in 2022, indicating151.16 per cent change, Sardine was sold for N200  in 2020 but now, N600 2022 representing a change of 200 per cent, Loaf of Bread of N350 in 2020 jumped to N600 in 2022 at a price change of 71.43 per cent, and 12kg Cooking gas moved from N3,500 in 2020 toN8,000 in 2022 indicating a 129 per cent price change. 

Rice was sold for N25,000 in 2020 and now hovers between N30,000 and N35,000 in 2022, a 20 percent price change, and, Fertilizer that was N5,000 in 2020 has moved to N16,000 in 2022 which indicates a 220 percent price change.

While speaking further on the ongoing forex challenges in the country, Ajayi-Kadir said: “The worsening foreign exchange crisis is reflected in the sharp and continuous depreciation of the Naira exchange rate. The difference between the parallel market rate which had depreciated by over 15 per cent in the past three months reaching a low of N590/dollar currently, continues to widen from the official exchange rate of N416/dollar. 

The widening gap between the parallel and the official market rate, the MAN’s D-G has left the economy distorted, adding that the second dimension of the foreign exchange problem is the liquidity challenge in the Investors and Exporters window. 
“The operating exchange rate for economic players remains the parallel market rate because the investor and exporters (I & E) of the Central Bank of Nigeria, CBN, is not liquid”.

It would be recalled that the CBN last year stopped the sale of forex to the Bureau De Change, BDCs, in a policy change that shifts attention to the banks who are now mandated to set up a desk for the sale of forex to those in need after meeting certain conditions.

MAN, in the twilight of 2021 raised the alarm that its members could not access forex from the banks, forcing them to turn to the parallel market operated by the BDCs for their forex needs for the importation of raw materials.

Data from the CBN shows that Foreign exchange inflow through the economy declined in the fourth quarter of 2021, owing to lower inflow through both the Bank and autonomous sources. Foreign exchange inflow into the economy fell by 31.7 per cent to $20.62 billion, from $30.20 billion in the preceding period. 
The development was driven by the 45.5 per cent and 14.4 percent lower inflow through the CBN and the autonomous sources, respectively. Foreign exchange inflow through the Bank at $9.18 billion, fell below the $16.83 billion in the preceding quarter as both oil and non-oil receipts declined, as a result of lower receipts from interest on reserves and interbank swaps.

 A disaggregation showed that proceeds from oil-related sources declined by 12.2 per cent to $1.63 billion, relative to the preceding period. Similarly, receipts from non-oil sources fell to $7.54 billion, compared with $14.97 billion in the preceding quarter. 

“The twin problem of the precipitous currency depreciation and the worsening liquidity crisis in the foreign exchange market constitute major headwinds to economic performance and investment growth”, concluded the MAN’s D-G.